Free-Trade Politics In US and Mexico

By
Sol W. Sanders /
May 29, 1991

THE debate over extending the White House's "fast track" authority to negotiate a free-trade agreement with Mexico is over, now that Congress has allowed the authority to continue. It has become clear, however, that there were hidden political agendas in both countries having little to do with trade. Political leaders in the United States have become a lot more knowledgeable over the past decade about Mexico's permanent politico-economic crisis. No one knows better than Texans like President Bush and Secretary of State James Baker how Mexico's classic third-world issues are spilling on to our doorstep.

Yet while the depth of the Mexican crisis is portentous for the US, the Bush administration does not have a basic Mexico strategy. Instead, it pursues tactics that obscure the issues but court other constituencies, or, at best, provide Band-Aid slogans like US-Mexico free trade. No negotiated free-trade agreement will solve any basic issues for Mexico and Washington's concern for events there.

Trade between the two countries is already maximized. The US has entry to the Mexican market, our third largest. President Carlos Salinas de Gortari has reduced costs for the potent Mexican upper class by permitting maximum imports. But per capita incomes are dropping. That means that predictions of a huge, expanding market are much like the nonsense written so often about trade with China in the post-recognition era.

IT is true that Mexico sometimes suffers when Florida tomato producers, for example, raise the issue of imports. We occasionally halt imports of Mexican steel, produced under heavy government subsidies. But the openness of the American market already exceeds the entrepreneurial capabilities of Mexican producers. (Oil, Mexico's principal source of foreign exchange after remittances from Mexican workers in the US and tourism dollars, is to be exempted from the trade talks.) US manufacturers already have a c

cess to cheap Mexican labor through the maquiladora plants just south of the border that manufacture for export.

Somehow, some way, the proponents tell us, free trade will do what President Salinas has so far not dared: Invite foreign investors into the oil fields before Mexico becomes a net importer. Scrap a collectivized agricultural policy that makes Soviet agriculture look good, and that pushes thousands of peasants monthly into the deteriorating cities. End foreign-exchange manipulation that has cost billions of dollars. Dump foreign-investment procedures that discourage development. Coax the $100 billion in f

light capital owned by Mexican nationals back into the country.

Perhaps. Some of Salinas's liberal economic advisers hope for that. They want, as one close to them put it the other day, to put a "straitjacket on the next Mexican government to keep it from retreating from Salinas's still-feeble attempts at liberalization.

But political analysis in Mexico is much more imaginative: Salinas, the youngest president since the 1920s, wants to be the Calles of the 1990s - a continuing kingmaker. (Mexico's constitutional bar against reelection for the six-year term is sacrosanct.)

Yet Salinas's own election four years ago had little legitimacy, for even with traditional "alchemy" at the polls, he had less than an official majority. In coming congressional elections, Salinas fears the conservatives, not the left of Cuahtemac Cardenas and its strength in the underdeveloped Indian south. His enemy is the National Action Party (PAN), a moderate to conservative party, strong in the industrial north.

"Free trade" slogans go a long way toward seducing PAN's traditional support in the private sector away to the government's Party of the Institutionalized Revolution (PRI). And when he meets Pope John Paul II in Rome in early July to win approval formal diplomatic relations with the Vatican, broken during the revolution of 1910, Salinas will remove the last prop from under the unofficially Roman Catholic PAN.

Domestic political concerns in both countries, then, not trade, were the essence of the free-trade debate.

A second paperback edition of Sol Sanders's "Mexico: Chaos on our Doorstep" appeared recently.